Module 1 8th Dec 2023

Waste Management and Closed Loop Recycling

 Waste management encompasses the strategies organisations use not only to
dispose of waste but also to reduce, recycle and prevent it from occurring in the first
place.
 Waste management is also a prominent feature at the end-of-life stages of asset
management.

Regulations Related to Waste Management

 The Regulations are designed to protect the following:

 Human health and well being
 The environment; rivers and streams, air, land, trees, wildlife, ancient
monuments, buildings, burial grounds, scarce raw materials and rare earth
metals

Closed Loop Recycling

 Closed-loop recycling – the recycled waste can be reprocessed or repurposed
indefinitely to make either new products or returned to the environment as
biodegradable wastes
 Open-loop recycling – products go through the recycling process but need to be
mixed with new materials in order to become a new product.
 Downcycling – Often, in open-loop recycling, products are recycled to create new
products with lower functionality and quality than the original, meaning they cannot
be recycled again.

Regulations Related to Waste Management

 The Regulations are designed to protect the following:

 Human health and well being
  The environment; rivers and streams, air, land, trees, wildlife, ancient
monuments, buildings, burial grounds, scarce raw materials and rare earth
metals
WEEE  waste electrical and electronic equipment directive
The Waste Hierarchy

The Five Rights of Procurement

 Right Quantity
 Right Quality
 Right Place
 Right Time
 Right Price
Additional Rights

 Right Source/supplier
 Right Relationship with the Right Supplier
 Right Process

Total Lifecycle Costs

  Purchase price
 Net price (without taxes)
 Gross price (with taxes)
 Landed cost (gross price + logistics cost)
 Total Cost of Acquisition (TCA)
 Total Cost of Ownership (TCO) (often used interchangeably with LCC and WLC)
 Life cycle cost (LCC) (no end-of-life costs)
 Whole life cost (WLC)  construction sector (include cost of demolition of an old
construction and preparation of the ground)
TCO = TCA + Recurring costs + EOL costs
LCC = TCO – EOL costs (construction sector)
LCC = TCA + Recurring costs

TCA  total cost of acquisition (the total cost that we incur in acquiring the product and
getting it ready for use)
 Pre-placement costs + Order placement costs + Post-placement costs
 Sourcing costs (administrative costs of sourcing) + order placement costs + price +
taxes/duties + logistics cost + receiving and inspection costs + installation &
commissioning + cost of initial training +…)
Asset
TCO  Total cost of ownership (the sum of all costs that we incur in the acquisition of the
asset, use and maintenance of the asset till the asset reaches the end of life and is disposed
of)
TCO  TCA + Recurring costs + End-of-life costs
 TCA + Cost of operations + Cost of Maintenance + End-of-life costs (Disposal costs –
resale value)
Achieving 5 Rights
 The contract / PO contains various elements which enable the buyer to achieve the 5
Rights (Table 1.6 page 33)
 The key performance indicators are also used to achieve the 5 Rights
 Ways to achieve the Right Price include:
 Benchmarking (with quotations)
 Negotiation
 Open book costing
 Take advantage of volume discounts
Other Sources of Added Value
 Additional features
 Brand
 Convenience
 Excellence of service
 Market development
 Reduced cost of inputs
 Reputation
 Innovation
 Sustainability

Goods: Tangible products, in the sale of goods, there is a ‘transfer of ownership’

Services: Intangible, in the sale of services, there is no concept of ownership
Works – construction (new or repair)

Costs
Direct items – which are directly related to the end product (or delivery of the service) 
raw materials, components (parts)
Indirect items – items which are not directly associated with the end product but helps the
production process to continue (MRO  Maintenance, Repair and Operating Supplies 
spares and consumables)
 a) Direct cost – any cost associated directly with the end product (direct materials,
direct labour)
Wage –
b) Indirect cost - any cost not directly associated with the end product
Salary -

c) Fixed cost – any cost which does not vary with the output (or rate of production)
(Example – Rent of the factory)

d) Variable cost – any cost which varies with the output (or the rate of production)

e) Semi-variable  utilities like electricity, water etc.

Stock items – items which are used regularly and hence stored inhouse (stock unit code)
Non-stock items – items that are generally not used regularly and hence not stored inhouse.
These are purchased as and when required.

In 1983, Peter Kraljic published a paper titled “Purchasing Must Become Supply
Management”, HBR
 Kraljic Model / Procurement Portfolio Matrix / Supplier Positioning Matrix

High
Items: (H, L) Leverage Items : (H,H) Strategic items
items/suppliers / suppliers
Strategy: Exploiting Strategy: Balance
(partnership) / diversify /
Profit
exploit)
Impact / Cost Items: (L,L) Routine items / Items: (L,H) Bottleneck
Impact
suppliers items / suppliers
(Non-critical items) Strategy: Volume assurance
Strategy: Efficient purchasing
(Blanket PO, framework
Low agreement, e-procurement)

Low Supply Risk High

Profit/cost impact – The profit impact of a given supply item can be defined in terms of the
volume purchased, percentage of total purchase cost, or impact on product quality or
business growth
Supply risk – Supply risk is assessed in terms of availability, number of suppliers,
competitive demand, make-or-buy opportunities, and storage risks and substitution
possibilities